EX-4.7





 Exhibit 4.7 

HYDRO ONE LIMITED 

Unaudited Pro Forma Condensed Consolidated Financial Statements 

As at and for the nine months ended September 30, 2018 and for the year ended December 31, 2017 

November 15, 2018 
  












 HYDRO ONE LIMITED 

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

Hydro One Limited (Hydro One or the Company), Olympus Holding Corp., Olympus Corp. and Avista Corporation (Avista) entered into an agreement
and plan of merger dated as of July 19, 2017 (Merger Agreement). Pursuant to the Merger Agreement, Hydro One will indirectly acquire Avista (Merger) for US$53 (approximately $68 at the exchange rate of $1.2908 = US$1.00 on September 30,
2018) per Avista common share for an aggregate purchase price of approximately US$5,514 million (approximately $7,118 million at the exchange rate of $1.2908 = US$1.00 on September 30, 2018), comprised of an equity purchase of
approximately US$3,481 million (approximately $4,494 million at the exchange rate of $1.2908 = US$1.00 on September 30, 2018) and the assumption of approximately US$2,006 million of Avista’s outstanding debt (approximately
$2,589 million at the exchange rate of $1.2908 = US$1.00 on September 30, 2018) and cash paid to settle existing Avista share based compensation of US$27 million (approximately $35 million at the exchange rate of $1.2908 = US$1.00 on
September 30, 2018). 
 Since the acquisition is to be paid in US dollars, the actual amount paid, when measured in Canadian dollars may
vary with a change to the exchange rate. Hydro One has entered into a deal-contingent foreign exchange forward contract (forward contract) to partially mitigate the foreign exchange fluctuation risk. 

The accompanying unaudited pro forma condensed consolidated financial statements give effect to the proposed acquisition by Hydro One
of Avista under the acquisition method of accounting. The unaudited pro forma condensed consolidated balance sheet gives effect to the Merger as if it had closed on September 30, 2018. The unaudited pro forma consolidated
statements of operations for the year ended December 31, 2017 and the nine months ended September 30, 2018 give effect to the Merger as if it had closed on January 1, 2017. 

The following unaudited pro forma condensed consolidated financial statements are based on Avista’s historical unaudited
consolidated financial statements as at and for the nine months ended September 30, 2018 and audited consolidated financial statements for the year ended December 31, 2017, and Hydro One’s historical unaudited consolidated financial
statements as at and for the nine months ended September 30, 2018 and audited consolidated financial statements for the year ended December 31, 2017, and present the effects of the Merger on the combined historical financial statements of
Hydro One and Avista. The unaudited pro forma condensed consolidated financial statements should be read together with the notes to the unaudited pro forma condensed consolidated financial statements and the historical financial
statements of Hydro One and Avista. 
 The unaudited pro forma condensed consolidated financial statements (referred to herein as the
pro forma financial information) are presented for illustrative purposes only and do not include, among other things, estimated cost synergies, adjustments related to restructuring or integration activities, further acquisitions or disposals
not yet known or probable, or any costs that are currently not factually supportable and/or probable of occurring. The pro forma financial information has been prepared based upon available information and certain assumptions that Hydro One
believes are reasonable in the circumstances, as described in the notes to the unaudited pro forma condensed consolidated financial statements. 

Additionally, the pro forma financial information presented, including allocation of the estimated purchase price, is based on
preliminary estimates of fair values of assets to be acquired and liabilities assumed. The actual amounts of acquired assets and assumed liabilities in the condensed consolidated financial statements upon the closing of the Merger will depend on a
number of factors, including the impact of additional information available, foreign exchange rates and the amount of net assets of Avista on the closing date of the Merger. Therefore, the actual purchase adjustments will differ from those used to
prepare the pro forma financial information, and the differences may be material. For example, the final purchase price allocation is dependent on, among other things, the finalization of asset and liability valuations. This final valuation
will be based on the actual net tangible and intangible assets and liabilities of Avista that exist as of the closing date of the Merger. Any final adjustments may change the allocation of purchase price, which could affect the fair values assigned
to the assets and liabilities, and may result in a change to goodwill, depreciation and amortization expenses and earnings per share. 
 The
pro forma financial information is presented for informational purposes only and is not necessarily indicative of what Hydro One’s actual financial condition or results of operations would have been had the Merger been completed on the
date indicated, nor does it purport to project Hydro One’s future financial position or results of operations for any future periods or as of any future date. Accordingly, the combined business, assets, results of operations and financial
condition may differ significantly from those indicated. Dollar amounts herein are presented in Canadian dollars, unless otherwise expressly stated. 

  
 1 













 HYDRO ONE LIMITED 

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) 

At September 30, 2018 
  

																					
	 (millions of Canadian dollars)
	  	Hydro One
Limited	 	  	Avista
Corporation
(Note 5)	 	  	Adjustments	 	 	Note	 	 	Hydro One
Limited
Pro Forma
Consolidated	 
	 Assets
	  				  				  				 				 			
	 Current assets:
	  				  				  				 				 			
	 Cash and cash equivalents
	  	 	613	 	  	 	27	 	  	 	(4,529	) 	 	 	3	(A),(J) 	 	 	379	 
		  				  				  	 	1,000	 	 	 	3	(B) 	 			
		  				  				  	 	15	 	 	 	3	(G) 	 			
		  				  				  	 	3,332	 	 	 	3	(C) 	 			
		  				  				  	 	(79	) 	 	 	3	(D) 	 			
	 Accounts receivable
	  	 	590	 	  	 	135	 	  	 	—  	 	 				 	 	725	 
	 Due from related parties
	  	 	310	 	  	 	—  	 	  	 	—  	 	 				 	 	310	 
	 Other current assets
	  	 	129	 	  	 	153	 	  	 	(14	) 	 	 	3 	(E),(G) 	 	 	268	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
		  	 	1,642	 	  	 	315	 	  	 	(275	) 	 				 	 	1,682	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Property, plant and equipment
	  	 	20,475	 	  	 	5,880	 	  	 	—  	 	 				 	 	26,355	 
	 Other long-term assets:
	  				  				  				 				 			
	 Regulatory assets
	  	 	3,227	 	  	 	745	 	  	 	53	 	 	 	3	(I) 	 	 	4,025	 
	 Deferred income tax assets
	  	 	783	 	  	 	—  	 	  	 	14	 	 	 	3	(B),(H) 	 	 	797	 
	 Intangible assets
	  	 	379	 	  	 	—  	 	  	 	—  	 	 				 	 	379	 
	 Goodwill
	  	 	325	 	  	 	75	 	  	 	(75	) 	 	 	3	(A) 	 	 	2,670	 
		  				  				  	 	2,345	 	 	 	3	(A) 	 			
	 Other assets
	  	 	6	 	  	 	158	 	  	 	12	 	 	 	3	(E) 	 	 	176	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
		  	 	4,720	 	  	 	978	 	  	 	2,349	 	 				 	 	34,402	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Total assets
	  	 	26,837	 	  	 	7,173	 	  	 	2,074	 	 				 	 	36,084	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 

 See accompanying notes to Pro Forma Condensed Consolidated Financial Statements (unaudited). 

  
 2 














 HYDRO ONE LIMITED 

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) (continued) 

At September 30, 2018 
  


																					
	 (millions of Canadian dollars)
	  	Hydro One
Limited	 	 	Avista
Corporation
(Note 5)	 	 	Adjustments	 	 	Note	 	 	Hydro One
Limited
Pro Forma
Consolidated	 
	 Liabilities
	  				 				 				 				 			
	 Current liabilities:
	  				 				 				 				 			
	 Short-term notes payable
	  	 	444	 	 	 	45	 	 	 	—  	 	 				 	 	489	 
	 Long-term debt payable within one year
	  	 	981	 	 	 	3	 	 	 	—  	 	 				 	 	984	 
	 Accounts payable and other current liabilities
	  	 	960	 	 	 	400	 	 	 	26	 	 	 	3	(E) 	 	 	1,386	 
	 Due to related parties
	  	 	6	 	 	 	—  	 	 	 	—  	 	 				 	 	6	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
		  	 	2,391	 	 	 	448	 	 	 	26	 	 				 	 	2,865	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
	 Long-term liabilities:
	  				 				 				 				 			
	 Long-term debt
	  	 	10,475	 	 	 	2,469	 	 	 	3,332	 	 	 	3	(C) 	 	 	16,329	 
		  				 				 	 	53	 	 	 	3	(I) 	 			
	 Convertible debentures
	  	 	489	 	 	 	—  	 	 	 	(489	) 	 	 	3	(B) 	 	 	—  	 
	 Regulatory liabilities
	  	 	174	 	 	 	1,030	 	 	 	—  	 	 				 	 	1,204	 
	 Deferred income tax liabilities
	  	 	74	 	 	 	631	 	 	 	—  	 	 				 	 	705	 
	 Other long-term liabilities
	  	 	2,755	 	 	 	336	 	 	 	52	 	 	 	3	(E) 	 	 	3,143	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
		  	 	13,967	 	 	 	4,466	 	 	 	2,948	 	 				 	 	21,381	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
	 Total liabilities
	  	 	16,358	 	 	 	4,914	 	 	 	2,974	 	 				 	 	24,246	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
	 Noncontrolling interest subject to redemption
	  	 	21	 	 	 	—  	 	 	 	—  	 	 				 	 	21	 
	 Equity
	  				 				 				 				 			
	 Common shares
	  	 	5,641	 	 	 	1,466	 	 	 	1,503	 	 	 	3	(B) 	 	 	7,144	 
		  				 				 	 	(1,466	) 	 	 	3	(F) 	 			
	 Preferred shares
	  	 	418	 	 	 	—  	 	 	 	—  	 	 				 	 	418	 
	 Additional paid-in capital
	  	 	54	 	 	 	—  	 	 	 	92	 	 	 	3	(B) 	 	 	146	 
	 Retained earnings
	  	 	4,301	 	 	 	804	 	 	 	(92	) 	 	 	3	(B) 	 	 	4,065	 
		  				 				 	 	(79	) 	 	 	3	(D) 	 			
		  				 				 	 	(60	) 	 	 	3	(E) 	 			
		  				 				 	 	(804	) 	 	 	3	(F) 	 			
		  				 				 	 	(5	) 	 	 	3	(G) 	 			
	 Accumulated other comprehensive income
	  	 	(5	) 	 	 	(11	) 	 	 	11	 	 	 	3	(F) 	 	 	(5	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
	 Shareholders’ equity
	  	 	10,409	 	 	 	2,259	 	 	 	(900	) 	 				 	 	11,768	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
	 Noncontrolling interest
	  	 	49	 	 	 	—  	 	 	 	—  	 	 				 	 	49	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
	 Total equity
	  	 	10,458	 	 	 	2,259	 	 	 	(900	) 	 				 	 	11,817	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 
	 Total liabilities and equity
	  	 	26,837	 	 	 	7,173	 	 	 	2,074	 	 				 	 	36,084	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				 	  
	  
	 

 See accompanying notes to Pro Forma Condensed Consolidated Financial Statements (unaudited). 

 

  
 3 













 HYDRO ONE LIMITED 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) 

For the nine months ended September 30, 2018 
  

																					
	 (millions of Canadian dollars, except per share amounts)
	  	Hydro One
Limited	 	  	Avista
Corporation
(Note 5)	 	  	Adjustments	 	 	Note	 	 	Hydro One
Limited
Pro Forma
Consolidated	 
	 Revenues
	  				  				  				 				 			
	 Distribution
	  	 	3,284	 	  	 	—  	 	  	 	—  	 	 				 	 	3,284	 
	 Transmission
	  	 	1,344	 	  	 	—  	 	  	 	—  	 	 				 	 	1,344	 
	 Avista
	  	 	—  	 	  	 	1,293	 	  	 	(9	) 	 	 	3	(E) 	 	 	1,284	 
	 Other
	  	 	31	 	  	 	25	 	  	 	—  	 	 				 	 	56	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
		  	 	4,659	 	  	 	1,318	 	  	 	(9	) 	 				 	 	5,968	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Costs
	  				  				  				 				 			
	 Energy*
	  	 	2,158	 	  	 	466	 	  	 	—  	 	 				 	 	2,624	 
	 Operation, maintenance and administration
	  	 	797	 	  	 	440	 	  	 	(10	) 	 	 	3	(D) 	 	 	1,227	 
	 Depreciation and amortization
	  	 	620	 	  	 	176	 	  	 	—  	 	 				 	 	796	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
		  	 	3,575	 	  	 	1,082	 	  	 	(10	) 	 				 	 	4,647	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Income before financing charges and income taxes
	  	 	1,084	 	  	 	236	 	  	 	1	 	 				 	 	1,321	 
	 Financing charges
	  	 	336	 	  	 	97	 	  	 	98	 	 	 	3	(B),(G) 	 	 	531	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Income before income taxes
	  	 	748	 	  	 	139	 	  	 	(97	) 	 				 	 	790	 
	 Income taxes
	  	 	115	 	  	 	22	 	  	 	(24	) 	 	 	3	(H) 	 	 	113	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Net income
	  	 	633	 	  	 	117	 	  	 	(73	) 	 				 	 	677	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Earnings per common share
	  				  				  				 				 			
	 Basic
	  	$	1.03	 	  				  				 	 	4	 	 	$	0.99	 
	 Diluted
	  	$	1.03	 	  				  				 	 	4	 	 	$	0.99	 

  

	*	 Includes the cost of purchased natural gas for Avista 



See accompanying notes to Pro Forma Condensed Consolidated Financial Statements (unaudited). 

  
 4 













 HYDRO ONE LIMITED 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) 

For the year ended December 31, 2017 
  

																					
	 (millions of Canadian dollars, except per share amounts)
	  	Hydro One
Limited	 	  	Avista
Corporation
(Note 5)	 	  	Adjustments	 	 	Note	 	 	Hydro One
Limited
Pro Forma
Consolidated	 
	 Revenues
	  				  				  				 				 			
	 Distribution
	  	 	4,366	 	  	 	—  	 	  	 	—  	 	 				 	 	4,366	 
	 Transmission
	  	 	1,578	 	  	 	—  	 	  	 	—  	 	 				 	 	1,578	 
	 Avista
	  	 	—  	 	  	 	1,848	 	  	 	(12	) 	 	 	3	(E) 	 	 	1,836	 
	 Other
	  	 	46	 	  	 	29	 	  	 	—  	 	 				 	 	75	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
		  	 	5,990	 	  	 	1,877	 	  	 	(12	) 	 				 	 	7,855	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Costs
	  				  				  				 				 			
	 Energy*
	  	 	2,875	 	  	 	681	 	  	 	—  	 	 				 	 	3,556	 
	 Operation, maintenance and administration
	  	 	1,066	 	  	 	604	 	  	 	(39	) 	 	 	3	(D) 	 	 	1,631	 
	 Depreciation and amortization
	  	 	817	 	  	 	223	 	  	 	—  	 	 				 	 	1,040	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
		  	 	4,758	 	  	 	1,508	 	  	 	(39	) 	 				 	 	6,227	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Income before financing charges and income taxes
	  	 	1,232	 	  	 	369	 	  	 	27	 	 				 	 	1,628	 
	 Financing charges
	  	 	439	 	  	 	112	 	  	 	133	 	 	 	3	(B),(G) 	 	 	684	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Income before income taxes
	  	 	793	 	  	 	257	 	  	 	(106	) 	 				 	 	944	 
	 Income taxes
	  	 	111	 	  	 	107	 	  	 	(33	) 	 	 	3	(H) 	 	 	185	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Net income
	  	 	682	 	  	 	150	 	  	 	(73	) 	 				 	 	759	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 				 	  
	  
	 
	 Earnings per common share
	  				  				  				 				 			
	 Basic
	  	$	1.11	 	  				  				 	 	4	 	 	$	1.10	 
	 Diluted
	  	$	1.10	 	  				  				 	 	4	 	 	$	1.10	 

  

	*	 Includes the cost of purchased natural gas for Avista 



See accompanying notes to Pro Forma Condensed Consolidated Financial Statements (unaudited). 

 

  
 5 













 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

1. DESCRIPTION OF THE ACQUISITION 
 On
July 19, 2017, Hydro One, Olympus Holding Corp., Olympus Corp. and Avista entered into the Merger Agreement. Pursuant to the Merger Agreement, Hydro One will indirectly acquire Avista for US$53 (approximately $68 at the exchange rate of $1.2908
= US$1.00 on September 30, 2018) per Avista common share for an aggregate purchase price of approximately US$5,514 million (approximately $7,118 million at the exchange rate of $1.2908 = US$1.00 on September 30, 2018), comprised
of an equity purchase of approximately US$3,481 million (approximately $4,494 million at the exchange rate of $1.2908 = US$1.00 on September 30, 2018) and the assumption of approximately US$2,006 million of Avista’s
outstanding debt (approximately $2,589 million at the exchange rate of $1.2908 = US$1.00 on September 30, 2018) and cash paid to settle existing Avista share based compensation of US$27 million (approximately $35 million at the exchange
rate of $1.2908 = US$1.00 on September 30, 2018). 
 The accompanying pro forma financial information assumes that at closing, the
Merger will be financed through the net proceeds from a $1.54 billion common share equity issuance as further described below, with the balance funded through long-term debt as further described below. 

The common share equity is assumed to be issued through the conversion of the 4% convertible unsecured subordinated debentures (Convertible
Debentures) represented by instalment receipts that were issued by Hydro One on August 9, 2017 and that are convertible into common shares of Hydro One at a conversion price of $21.40 per common share. Hydro One also proposes to issue debt in
the amount of US$2.6 billion (approximately $3.4 billion at the exchange rate of $1.2908 = US$1.00 on September 30, 2018). 

The accompanying pro forma financial information assumes that the Convertible Debentures are issued and converted in full into Hydro
One common shares at the assumed closing date of the Merger. Therefore, the accompanying pro forma statement of operations does not recognize interest costs associated with the Convertible Debentures. Hydro One anticipates that the closing of
the Merger will occur in the last quarter of 2018 (or the first quarter of 2019). As a result, the Company has included the cost of financing the Convertible Debentures as a pro forma adjustment. Due to many factors, including the timing of
regulatory approvals, the estimated closing period is subject to change which may change the amount of interest expense incurred on the Convertible Debentures and the related income tax recovery. Interest costs associated with the Convertible
Debentures are expected to be funded through operating cash flows. 
 2. BASIS OF PRESENTATION 

The accompanying pro forma financial information gives effect to the proposed Merger. The accompanying pro forma financial
information has been prepared by management of Hydro One and is derived from the unaudited and audited consolidated financial statements of Hydro One as at and for the nine months ended September 30, 2018 and for the year ended
December 31, 2017, respectively, and the unaudited and audited consolidated financial statements of Avista as at and for the nine months ended September 30, 2018 and for the year ended December 31, 2017, respectively. 

The accompanying pro forma financial information uses accounting policies that are consistent with those disclosed in Hydro One’s
and Avista’s audited consolidated financial statements as at and for the year ended December 31, 2017 and unaudited consolidated financial statements as at and for the nine months ended September 30, 2018, and was prepared in
accordance with accounting principles generally accepted in the United States (US GAAP). The accompanying unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of operations reflect the Merger
as if it had closed on September 30, 2018 and January 1, 2017, respectively. The accompanying unaudited pro forma consolidated financial statements may not be indicative of the results that would have been achieved if the
transactions reflected therein had been completed on the dates indicated or the results which may be obtained in the future. For instance, the actual purchase price allocation will reflect the fair values, at the purchase date, of the assets
acquired and liabilities assumed based upon Hydro One’s evaluation of such assets and liabilities following the closing of the Merger and, accordingly, the final purchase price allocation may differ materially from the preliminary allocation
reflected herein. 
 The accompanying pro forma financial information should be read in conjunction with the description of the
Merger and the proposed financing thereof contained in documents filed by Hydro One with the securities regulatory authorities in Canada and the United States; the most recent audited and unaudited consolidated financial statements of Avista,
including the notes thereto; and the most recent audited and unaudited consolidated financial statements of Hydro One, including the notes thereto, all of which have been filed by Hydro One with the securities regulatory authorities in Canada and
the United States. 
 Certain amounts in the historical financial statements of Avista have been reclassified in the unaudited pro
forma balance sheet and statements of operations to reflect the presentation classifications in Hydro One’s consolidated financial statements. In 
  

  
 6 














 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

 

 addition the historical financial statements of Avista have been translated from US dollars
to Canadian dollars to conform to the presentation currency of Hydro One. 
 Management believes the underlying assumptions used for the
preparation of the pro forma financial information provide a reasonable basis for presenting the significant financial effect directly attributable to the Merger. The pro forma adjustments used to prepare the pro forma financial
information are tentative and are based on currently available financial information and certain estimates and assumptions. The actual adjustments to the consolidated financial statements will depend on a number of factors. Therefore, it is expected
that the actual adjustments will differ from the pro forma adjustments used to prepare the pro forma financial information, and the differences may be material. 

The pro forma financial information presents the combined effect on the historical statements and provides the following resulting
information: 
  

					
	 Historical Information of Hydro One and Avista
	  	 Historical Dates and Giving Effect
	  	 Resulting Information

	Unaudited consolidated balance sheet	  	As at September 30, 2018	  	Unaudited pro forma condensed consolidated balance sheet, referred to as the unaudited pro forma balance sheet
			
	Audited consolidated statement of operations for the year ended December 31, 2017 and unaudited condensed interim consolidated statement of operations for the nine months ended September 30, 2018	  	 For the year ended December 31, 2017;

and for the nine months ended September 30, 2018
	  	 Unaudited pro forma condensed consolidated statements of operations, referred to as the unaudited pro forma statements of
operations
  
 Fair value adjustments to net assets acquired at September 30, 2018
have been applied to the assumed Merger date of January 1, 2017 for purposes of the unaudited pro forma statements of operations (see note 3)


 Amounts in the notes to the unaudited pro forma consolidated financial statements are stated in
Canadian dollars, unless otherwise indicated. The accompanying pro forma financial information may not be indicative of the results that would have been achieved if the transactions reflected herein had been completed on the dates indicated
or the results which may be obtained in the future. 
  

	3.	 PRO FORMA ASSUMPTIONS AND ADJUSTMENTS 



 

	 	(A)	 Pro forma Purchase Price and Purchase Price Allocation 



At the date of preparation of this pro forma financial information, certain pro forma adjustments have been made
as identified herein; however, the fair values of Avista’s identifiable assets and liabilities to be assumed and the full impact of applying acquisition accounting have not been fully determined. After reflecting the pro forma
adjustments made herein, the excess of the purchase price consideration over the adjusted book values of Avista’s identifiable net assets has been presented as goodwill. The Merger consideration in the unaudited pro forma financial
information is based on the agreed net purchase price of US$53 per share (approximately $68 using the exchange rate of $1.2908 = US$1.00 on September 30, 2018). Since the acquisition is to be paid in US dollars, the actual amount paid, when
measured in Canadian dollars, will vary. The assumed financing structure and partial mitigation of the foreign exchange fluctuation risk is outlined below. 

Avista is a public utility subject to regulation by state utility commissions. The retail electric and natural gas operations
are subject to the jurisdiction of various regulatory bodies, including the US Federal Energy Regulatory Commission for licensing of hydroelectric generation resources, and for electric transmission services and wholesale sales. The revenues and
earnings approved by the utility commissions are based on regulated rates of return that are applied to historic values of the regulated assets. Therefore, no fair value adjustments are expected to be made to property, plant and equipment and
intangible assets with respect to the regulated entities of Avista because all economic benefits and obligations associated with regulated assets beyond regulated thresholds accrue to Avista’s customers. 

The following is the estimated net purchase price, estimated net funding requirements and assumed financing structure for the
Merger. These estimates have been reflected in the accompanying unaudited pro forma financial information. 

  
 7 














 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

 


									
	 (millions of Canadian dollars)
	  	Note	 	 	Using exchange rates
in effect on
September 30, 2018	 
	 Estimated Net Purchase Price
	  				 			
	 Equity purchase price
	  				 	 	4,494	 
	 Fair value of Avista share-based payments settled in cash
	  	 	3	(J) 	 	 	35	 
	 Assumed debt of Avista
	  				 	 	2,589	 
		  				 	  
	  
	 
	 Estimated net purchase price
	  				 	 	7,118	 
	 Estimated Net Funding Requirements
	  				 			
	 Estimated net purchase price before assumed debt
	  				 	 	4,494	 
	 Assumed debt of Avista
	  				 	 	2,589	 
	 Common share issuance costs
	  	 	3	(B) 	 	 	54	 
	 Net interest (after tax) paid on Convertible Debentures
	  	 	3	(B) 	 	 	52	 
	 Long-term debt issuance costs
	  	 	3	(C) 	 	 	24	 
	 Estimated (after-tax) transaction costs
	  	 	3	(D) 	 	 	79	 
	 Fair value of Avista share-based payments settled in cash
	  	 	3	(J) 	 	 	35	 
		  				 	  
	  
	 
	 Estimated net funding requirements
	  				 	 	7,327	 
	 Assumed Financing Structure
	  				 			
	 Assumed debt of Avista
	  				 	 	2,589	 
	 Gross proceeds from Convertible Debentures converted to common shares
	  	 	3	(B) 	 	 	1,540	 
	 Settlement of the foreign exchange contract
	  	 	3	(G) 	 	 	15	 
	 Issuance of long-term debt
	  	 	3	(C) 	 	 	3,356	 
	 (Excess) cash
	  	 	3	(K) 	 	 	(173	) 
		  				 	  
	  
	 
		  				 	 	7,327	 
		  				 	  
	  
	 

 This estimated purchase price is based on Avista’s outstanding shares at the purchase
price of US$53 per share converted at a foreign exchange rate of C$1.2908 = US$1.00 on September 30, 2018. The purchase price used for the purposes of calculating pro forma adjustments is based on exchange rates as described in Note 5
below and will differ from this amount when exchange rates change. Hydro One entered into the forward contract in October 2017 to partially mitigate the foreign exchange fluctuation risk of the purchase price that is denominated in US dollars. 

Goodwill resulting from the Merger of $2,345 million is calculated as the difference between the net purchase price
(before assumed debt) of $4,529 million and the estimated fair value of the net assets acquired of $2,184 million, excluding Avista Corporation’s historical goodwill of $75 million. 

 

	 	(B)	 Assumed financing for the Merger contemplates the issuance, through the exercise of conversion rights
under the Convertible Debentures, of approximately 72 million common shares of Hydro One at $21.40 per share for gross proceeds of approximately $1.54 billion, which includes a base offering of approximately 65 million common shares
for proceeds of $1.4 billion plus the exercise in full of the over-allotment option for approximately 7 million common shares for proceeds of approximately $140 million. Underwriting costs are equal to 3.50% of the gross proceeds from
the sale of Convertible Debentures, in aggregate, which is approximately $54 million, and will result in a corresponding deferred tax asset of approximately $14 million based on Hydro One’s Canadian statutory income tax rate of 26.5%.



 Hydro One completed the sale of the Convertible Debentures on August 9, 2017 on an instalment
basis. The initial instalment was paid with gross proceeds of $513 million and net proceeds of $486 million after payment of $27 million of the underwriting fees, representing half the aggregate underwriting fees of $54 million.
The Convertible Debentures balance of $489 million as at September 30, 2018 is net of the unamortized debt issuance costs of $24 million. 

Upon payment of the final instalment in respect of the Convertible Debentures, assuming the Merger had closed and the final
instalment been paid on September 30, 2018, the remaining underwriting fees of approximately $27 million would be paid in cash. 

Since the cash proceeds from the initial instalment were received on August 9, 2017, the pro forma adjustment to
cash only reflects the incremental cash proceeds on September 30, 2018 of $1,000 million, which is also net of the remaining underwriting fees. The pro forma adjustment to common shares of approximately $1,503 million is
calculated net of the after tax underwriting fees of approximately $37 million and is reflected by the pro forma adjustment as incremental 

  
 8 














 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

 

 
cash proceeds of $1,000 million, the first instalment payment of $489 million and the recognition of a deferred tax asset of $14 million. 

The Convertible Debentures contained a beneficial conversion feature at the time of issuance due to the conversion feature
being in the money on the commitment date. The conversion feature is contingent on triggering of the final instalment payment, at which time it becomes exercisable. A pro forma adjustment on the condensed consolidated balance sheet as at
September 30, 2018 in the amount of $92 million has been included to reflect the beneficial conversion feature, assuming the date for payment of the final instalment is the assumed Merger closing date of September 30, 2018. 

Interest costs since August 9, 2017 of $70 million (and related tax effects of $18 million) associated with the
Convertible Debentures have already been paid and are reflected in the historical financial results of Hydro One. Pro forma adjustments have been included with the unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 2017 and for the nine months ended September 30, 2018 to remove the historical after tax interest costs incurred that previously reflected the assumed conversion of the Convertible Debentures into Hydro One
common shares as if the Merger had closed on January 1, 2017. 
  

	 	(C)	 Financing for the Merger may be obtained from a combination of sources, including proceeds of the
Convertible Debentures, proceeds from bridge lines of credit secured by Hydro One and proceeds from debt securities issued pursuant to the short form base shelf prospectus of Hydro One Holdings Limited (unconditionally guaranteed by Hydro One) and
proceeds from securities issued under the short form base shelf prospectus of Hydro One. The financing sources, in aggregate, total approximately $4.94 billion (which is currently expected to be made up of $3.356 billion debt and
$1.54 billion from Convertible Debentures). The maturity dates and other terms of the debt securities that may be issued will not be known until the debt is issued. Gross proceeds of approximately $3.356 billion from issuance of debt have
been assumed and debt issuance costs in the aggregate of approximately $24 million have been recognized as a direct deduction to the debt. 


  

	 	(D)	 Transaction costs not yet incurred are estimated at approximately $53 million ($47 million
after tax) and are composed of estimated investment banking fees, credit rating agency fees, legal and accounting advisory fees and real estate transfer taxes. Change in control payments to employees of Avista are approximately $32 million and
represent estimated change in control liabilities as a result of the Merger. These transaction related costs and the change in control payments, in aggregate, are expected to be approximately $85 million ($79 million after tax) and are
assumed to be paid in cash based on estimates by Hydro One management. These costs have been included as a pro forma adjustment to cash and retained earnings on the unaudited pro forma balance sheet. They are not reflected in the
unaudited pro forma statement of earnings on the basis that these expenses are directly attributable to the Merger and are non-recurring in nature. 



Pro forma adjustments to the statement of operations include removal of the
non-recurring historical transaction costs from operation, maintenance and administration of $39 million and $10 million for the year ended December 31, 2017 and for the nine months ended
September 30, 2018, respectively. 
  

	 	(E)	 As part of the Merger Agreement, and in connection with obtaining regulatory approval from various US
state regulatory authorities, Hydro One has agreed to extend certain benefits to rate payers within those states in which Avista operates over periods of one to ten years. These commitments will be settled through varying payment structures,
including rate credits applied to Avista customers and disbursements to different charitable organizations and community groups within those states in which Avista operates. The commitments may change until they are finalized as part of the approval
from each US state regulatory authority. 


 Pro forma adjustments to the consolidated statement of
operations include a reduction to revenues of $12 million ($8 million after tax) and $9 million ($7 million after tax) pertaining to the rate credits for the year ended December 31, 2017 and for the nine months ended
September 30, 2018, respectively. The rate credits are intended to provide rate relief to customers based on energy usage and therefore these benefits are not included with the pro forma adjustments to liabilities and are not considered
to be part of the acquisition date assumed liabilities or purchase price. 
 Pro forma adjustments to the consolidated
balance sheet as at September 30, 2018 also include increases to accounts payable and other current liabilities of $26 million, other long-term liabilities of $52 million and a reduction to retained earnings of $60 million after
tax, which represents the estimated commitments, other than the rate credits, as if the Merger had closed on September 30, 2018. These commitments are 

  
 9 














 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

 

 
expected to be recorded and expensed upon closing and are not considered to be part of the acquisition date assumed liabilities or purchase price. 

 

	 	(F)	 Elimination of Avista’s historical outstanding common shares, retained earnings and accumulated other
comprehensive income as of September 30, 2018. 


  

	 	(G)	 The assumed interest expense on the Company’s proposed issuance of debt described in Note 3(C) above
was $160 million and $119 million for the year ended December 31, 2017 and for the nine months ended September 30, 2018, respectively. 



Pro forma adjustments to financing charges on the consolidated statement of operations include removal of the historical
net interest costs on the Convertible Debentures as described in Note 3(B) of $24 million and $46 million for the year ended December 31, 2017 and for the nine months ended September 30, 2018, respectively. 

In October, 2017, Hydro One entered into the forward contract to convert $1.4 billion of the cash proceeds from the
issuance of Convertible Debentures to US dollars in order to economically mitigate a portion of the foreign exchange fluctuation risk on the purchase price that is denominated in US dollars. 

Pro forma adjustments to the statement of operations include removal of the associated loss from the forward contract of
$3 million and the gain of $25 million from financing charges for the year ended December 31, 2017 and for the nine months ended September 30, 2018, respectively. 

The pro forma adjustments to the balance sheet include the after tax net impacts for settlement of the forward contract
as if the Merger had closed on September 30, 2018, resulting in an increase to cash and cash equivalents of $15 million and a decrease in other current assets of $20 million and retained earnings of $5 million. 

 

	 	(H)	 Income taxes applicable to the pro forma adjustments for items with tax effect in the Canadian
entities are calculated at the average tax rate of 26.50%. Income taxes applicable to the pro forma adjustments for items with tax effect in the US entities are calculated at the average tax rates of 36.69% and 23.05% for the year ended
December 31, 2017 and for the nine months ended September 30, 2018, respectively. 


  

	 	(I)	 Hydro One has recorded an adjustment to the fair value of Avista’s long-term debt and recorded a
regulatory offset of $53 million to regulatory assets for the portion of the fair value adjustment to long-term debt held within regulated operations. Hydro One views the regulatory offset upon closing of the Merger as a proxy for the
regulatory asset that would be recorded in the event such debt was extinguished at an amount higher than the carrying value. 


  

	 	(J)	 As described in the Merger Agreement, Hydro One agreed to exchange certain of Avista’s
outstanding share-based compensation awards for a cash payment of $35 million. Hydro One has the option to settle a portion of the awards by conversion to equivalent Hydro One share based compensation awards, but it has been assumed that they
will be settled in cash. Each award was measured at fair value on the assumed date of the Merger with an aggregate value of $35 million . 


  

	 	(K)	 Excess cash of $173 million is after accounting for the net cash proceeds of $434 million
($486 million less after tax interest payments of $52 million) that is already reflected in the historical financial statements of Hydro One as described in Note 3(B). The aggregate pro forma adjustments to cash and cash equivalents, a
reduction of $261 million on the unaudited pro forma consolidated balance sheet, represents the excess cash of $173 million, net of the $434 million already received. 



 

	4.	 PRO FORMA SHARES OUTSTANDING 



Earnings per common share is calculated by dividing earnings attributable to common shareholders by the weighted average number of common
shares outstanding. 
 The calculation of the pro forma earnings per common share, for the nine months ended September 30, 2018
and for the year ended December 31, 2017, reflect the assumed conversion of the Convertible Debentures as if the Merger had closed on January 1, 2017. The basic and diluted earnings per common share and basic and diluted weighted average
number of common shares outstanding for the pro forma reporting periods are determined as follows: 

  
 10 














 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

 


									
	 (Canadian dollars, number of shares in millions)
	  	For year ended December
31, 2017	 	  	For nine months ended
September 30, 2018	 
	 Earnings per common share*
	  	$	1.10	 	  	$	0.99	 
	 Diluted earnings per common share*
	  	$	1.10	 	  	$	0.99	 
	 Shares outstanding
	  				  			
	 Weighted average shares of Hydro One Limited—basic
	  	 	595	 	  	 	596	 
	 Convertible Debentures converted common shares outstanding—basic
	  	 	72	 	  	 	72	 
		  	  
	  
	 	  	  
	  
	 
	 Pro forma weighted average shares outstanding - basic
	  	 	667	 	  	 	668	 
		  	  
	  
	 	  	  
	  
	 
	 Effect of dilutive stock-based compensation plans
	  	 	2	 	  	 	2	 
		  	  
	  
	 	  	  
	  
	 
	 Pro forma weighted average shares of Hydro One Limited—diluted
	  	 	669	 	  	 	670	 
		  	  
	  
	 	  	  
	  
	 

  

	*	 Excludes net income attributable to noncontrolling interest and preferred shareholders, in aggregate, of
$24 million for the year ended December 31, 2017 and $17 million for the nine months ended September 30, 2018. 


  

	5.	 CURRENCY TRANSLATION AND CLASSIFICATION ADJUSTMENTS 



The assets and liabilities of Avista, which has a US$ reporting and functional currency, are translated at the exchange rate of C$1.2908 =
US$1.00 which was the rate published by Bloomberg as at September 30, 2018. Revenues and expenses in Avista’s statement of operations are translated to Canadian dollars using the rates published by Bloomberg at an average exchange rate of
$1.2875 = US$1.00 for the nine months ended September 30, 2018, and $1.2983 = US$1.00 for the year ended December 31, 2017. 

Reclassifications were made to align the presentation of Avista’s financial statement amounts with Hydro One’s financial statement
amounts in the accompanying unaudited pro forma financial information. No material differences in accounting policies under US GAAP have been identified; however, a more detailed analysis will be completed after the Merger. 

  
 11 














 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

 

 The following table presents Avista’s pro forma condensed consolidated balance
sheets reclassifications at September 30, 2018: 
  

																					
	 (in millions of dollars)
	  	Avista Historical
(US$)	 	 	Foreign
Exchange
Impact	 	 	Avista
Historical
(C$)	 	 	Reclassifications
(C$)	 	 	Amount after
Reclassifications
(C$)	 
	 Assets
	  				 				 				 				 			
	 Current assets:
	  				 				 				 				 			
	 Cash and cash equivalents
	  	 	21	 	 	 	6	 	 	 	27	 	 	 	—  	 	 	 	27	 
	 Accounts and notes receivable
	  	 	105	 	 	 	30	 	 	 	135	 	 	 	—  	 	 	 	135	 
	 Materials and supplies
	  	 	63	 	 	 	18	 	 	 	81	 	 	 	(81	) 	 	 	—  	(1) 
	 Regulatory assets
	  	 	21	 	 	 	6	 	 	 	27	 	 	 	(27	) 	 	 	—  	(1) 
	 Other current assets
	  	 	35	 	 	 	10	 	 	 	45	 	 	 	108	 	 	 	153 	(1) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total current assets
	  	 	245	 	 	 	70	 	 	 	315	 	 	 	—  	 	 	 	315	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Property, plant and equipment
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	5,880	 	 	 	5,880 	(2) 
	 Net utility property
	  	 	4,555	 	 	 	1,325	 	 	 	5,880	 	 	 	(5,880	) 	 	 	—  	(2) 
	 Goodwill
	  	 	58	 	 	 	17	 	 	 	75	 	 	 	—  	 	 	 	75	 
	 Non-current regulatory assets
	  	 	577	 	 	 	168	 	 	 	745	 	 	 	—  	 	 	 	745	 
	 Other property and investments-net and

other non-current assets
	  	 	122	 	 	 	36	 	 	 	158	 	 	 	(158	) 	 	 	—  	(3) 
	 Other assets
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	158	 	 	 	158 	(3) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total assets
	  	 	5,557	 	 	 	1,616	 	 	 	7,173	 	 	 	—  	 	 	 	7,173	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Liabilities
	  				 				 				 				 			
	 Current liabilities:
	  				 				 				 				 			
	 Accounts payable
	  	 	81	 	 	 	24	 	 	 	105	 	 	 	295	 	 	 	400 	(4) 
	 Current portion of long-term debt and leases
	  	 	3	 	 	 	—  	 	 	 	3	 	 	 	—  	 	 	 	3	 
	 Short-term borrowings
	  	 	35	 	 	 	10	 	 	 	45	 	 	 	—  	 	 	 	45	 
	 Regulatory liabilities
	  	 	95	 	 	 	28	 	 	 	123	 	 	 	(123	) 	 	 	—  	(4) 
	 Other current liabilities
	  	 	133	 	 	 	39	 	 	 	172	 	 	 	(172	) 	 	 	—  	(4) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total current liabilities
	  	 	347	 	 	 	101	 	 	 	448	 	 	 	—  	 	 	 	448	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Long-term liabilities:
	  				 				 				 				 			
	 Long-term debt
	  	 	1,861	 	 	 	541	 	 	 	2,402	 	 	 	67	 	 	 	2,469 	(5) 
	 Long-term debt to affiliated trusts
	  	 	52	 	 	 	15	 	 	 	67	 	 	 	(67	) 	 	 	—  	(5) 
	 Pensions and other post-retirement benefits
	  	 	191	 	 	 	56	 	 	 	247	 	 	 	(247	) 	 	 	—  	(6) 
	 Deferred income taxes
	  	 	489	 	 	 	142	 	 	 	631	 	 	 	—  	 	 	 	631	 
	 Non-current regulatory liabilities
	  	 	798	 	 	 	232	 	 	 	1,030	 	 	 	—  	 	 	 	1,030	 
	 Other non-current liabilities and deferred
credits
	  	 	69	 	 	 	20	 	 	 	89	 	 	 	247	 	 	 	336 	(6) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
		  	 	3,460	 	 	 	1,006	 	 	 	4,466	 	 	 	—  	 	 	 	4,466	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total liabilities
	  	 	3,807	 	 	 	1,107	 	 	 	4,914	 	 	 	—  	 	 	 	4,914	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Equity
	  				 				 				 				 			
	 Common stock
	  	 	1,136	 	 	 	330	 	 	 	1,466	 	 	 	—  	 	 	 	1,466	 
	 Accumulated other comprehensive loss
	  	 	(9	) 	 	 	(2	) 	 	 	(11	) 	 	 	—  	 	 	 	(11	) 
	 Retained earnings
	  	 	623	 	 	 	181	 	 	 	804	 	 	 	—  	 	 	 	804	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total equity
	  	 	1,750	 	 	 	509	 	 	 	2,259	 	 	 	—  	 	 	 	2,259	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
		  	 	5,557	 	 	 	1,616	 	 	 	7,173	 	 	 	—  	 	 	 	7,173	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Reclassify materials and supplies, and regulatory assets of $108 million to other current assets




	(2)	 Reclassify net utility property of $5,880 million to property, plant and equipment




	(3)	 Reclassify other property and investments-net and other non-current assets of $158 million to other assets 



	(4)	 Reclassify regulatory liabilities and other current liabilities of $295 million to accounts payable




	(5)	 Reclassify long-term debt to affiliated trusts of $67 million to long-term debt 



	(6)	 Reclassify pensions and other post-retirement benefits of $247 million to other non-current liabilities and deferred credits 



  
 12 














 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

 

 The following table presents Avista’s pro forma condensed consolidated statements
of income reclassifications for the nine months ended September 30, 2018: 
  

																					
	 (in millions of dollars)
	  	Avista
Historical
(US$)	 	 	Foreign
Exchange
Impact	 	 	Avista
Historical
(C$)	 	 	Reclassifications
(C$)	 	 	Amount after
Reclassifications
(C$)	 
	 Operating revenues:
	  				 				 				 				 			
	 Utility revenues
	  	 	1,004	 	 	 	289	 	 	 	1,293	 	 	 	—  	 	 	 	1,293	 
	 Non-utility revenues
	  	 	20	 	 	 	5	 	 	 	25	 	 	 	(25	) 	 	 	—  	(1) 
	 Other
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	25	 	 	 	25 	(1) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total operating revenues
	  	 	1,024	 	 	 	294	 	 	 	1,318	 	 	 	—  	 	 	 	1,318	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Operating expenses:
	  				 				 				 				 			
	 Purchased power
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	466	 	 	 	466 	(2) 
	 Operating, maintenance and administration
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	440	 	 	 	440 	(2) 
	 Depreciation and amortization
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	176	 	 	 	176 	(2) 
	 Utility operating expenses:
	  				 				 				 				 			
	 Resource costs
	  	 	362	 	 	 	104	 	 	 	466	 	 	 	(466	) 	 	 	—  	(2) 
	 Other operating expenses
	  	 	239	 	 	 	69	 	 	 	308	 	 	 	(308	) 	 	 	—  	(2) 
	 Depreciation and amortization
	  	 	136	 	 	 	39	 	 	 	175	 	 	 	(175	) 	 	 	—  	(2) 
	 Taxes other than income taxes
	  	 	81	 	 	 	23	 	 	 	104	 	 	 	(104	) 	 	 	—  	(2) 
	 Non-utility operating expenses:
	  				 				 				 				 			
	 Other operating expenses
	  	 	21	 	 	 	7	 	 	 	28	 	 	 	(28	) 	 	 	—  	(2) 
	 Depreciation and amortization
	  	 	1	 	 	 	—  	 	 	 	1	 	 	 	(1	) 	 	 	—  	(2) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total operating expenses
	  	 	840	 	 	 	242	 	 	 	1,082	 	 	 	—  	 	 	 	1,082	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income from operations
	  	 	184	 	 	 	52	 	 	 	236	 	 	 	—  	 	 	 	236	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Financing charges
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	97	 	 	 	97 	(3) 
	 Interest expense
	  	 	74	 	 	 	21	 	 	 	95	 	 	 	(95	) 	 	 	—  	(3) 
	 Interest expense to affiliated trusts
	  	 	1	 	 	 	—  	 	 	 	1	 	 	 	(1	) 	 	 	—  	(3) 
	 Capitalized interest
	  	 	(3	) 	 	 	(1	) 	 	 	(4	) 	 	 	4	 	 	 	—  	(3) 
	 Other expense—net
	  	 	4	 	 	 	1	 	 	 	5	 	 	 	(5	) 	 	 	—  	(3) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income before income taxes
	  	 	108	 	 	 	31	 	 	 	139	 	 	 	—  	 	 	 	139	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income taxes
	  	 	17	 	 	 	5	 	 	 	22	 	 	 	—  	 	 	 	22	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income
	  	 	91	 	 	 	26	 	 	 	117	 	 	 	—  	 	 	 	117	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Reclassify non-utility revenues of $25 million to other
revenues 



	(2)	 Reclassify utility operating expenses and non-utility operating
expenses of $1,082 million to operating expenses 



	(3)	 Reclassify interest and other expenses of $97 million to financing charges 



  
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 HYDRO ONE LIMITED 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) 

As at and for the nine months ended September 30, 2018, and for the year ended December 31, 2017 

 

 The following table presents Avista’s pro forma consolidated statements of income
reclassifications for the year ended December 31, 2017: 
  

																					
	 (in millions of dollars)
	  	Avista
Historical
(US$)	 	 	Foreign
Exchange
Impact	 	 	Avista
Historical
(C$)	 	 	Reclassifications
(C$)	 	 	Amount after
Reclassifications
(C$)	 
	 Operating revenues:
	  				 				 				 				 			
	 Utility revenues
	  	 	1,423	 	 	 	425	 	 	 	1,848	 	 	 	—  	 	 	 	1,848	 
	 Non-utility revenues
	  	 	23	 	 	 	6	 	 	 	29	 	 	 	(29	) 	 	 	—  	(1) 
	 Other
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	29	 	 	 	29 	(1) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total operating revenues
	  	 	1,446	 	 	 	431	 	 	 	1,877	 	 	 	—  	 	 	 	1,877	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Operating expenses:
	  				 				 				 				 			
	 Purchased power
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	681	 	 	 	681 	(2) 
	 Operating, maintenance and administration
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	604	 	 	 	604 	(2) 
	 Depreciation and amortization
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	223	 	 	 	223 	(2) 
	 Utility operating expenses:
	  				 				 				 				 			
	 Resource costs
	  	 	525	 	 	 	156	 	 	 	681	 	 	 	(681	) 	 	 	—  	(2) 
	 Other operating expenses
	  	 	332	 	 	 	100	 	 	 	432	 	 	 	(432	) 	 	 	—  	(2) 
	 Depreciation and amortization
	  	 	171	 	 	 	51	 	 	 	222	 	 	 	(222	) 	 	 	—  	(2) 
	 Taxes other than income taxes
	  	 	107	 	 	 	32	 	 	 	139	 	 	 	(139	) 	 	 	—  	(2) 
	 Non-utility operating expenses:
	  				 				 				 				 			
	 Other operating expenses
	  	 	25	 	 	 	8	 	 	 	33	 	 	 	(33	) 	 	 	—  	(2) 
	 Depreciation and amortization
	  	 	1	 	 	 	—  	 	 	 	1	 	 	 	(1	) 	 	 	—  	(2) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total operating expenses
	  	 	1,161	 	 	 	347	 	 	 	1,508	 	 	 	—  	 	 	 	1,508	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income from operations
	  	 	285	 	 	 	84	 	 	 	369	 	 	 	—  	 	 	 	369	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Financing charges
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	112	 	 	 	112 	(3) 
	 Interest expense
	  	 	95	 	 	 	29	 	 	 	124	 	 	 	(124	) 	 	 	—  	(3) 
	 Interest expense to affiliated trusts
	  	 	1	 	 	 	—  	 	 	 	1	 	 	 	(1	) 	 	 	—  	(3) 
	 Capitalized interest
	  	 	(3	) 	 	 	(1	) 	 	 	(4	) 	 	 	4	 	 	 	—  	(3) 
	 Other income—net
	  	 	(7	) 	 	 	(2	) 	 	 	(9	) 	 	 	9	 	 	 	—  	(3) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income before income taxes
	  	 	199	 	 	 	58	 	 	 	257	 	 	 	—  	 	 	 	257	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income taxes
	  	 	83	 	 	 	24	 	 	 	107	 	 	 	—  	 	 	 	107	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income
	  	 	116	 	 	 	34	 	 	 	150	 	 	 	—  	 	 	 	150	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	 Reclassify non-utility revenues of $29 million to other
revenues 



	(2)	 Reclassify utility operating expenses and non-utility operating
expenses of $1,508 million to operating expenses 



	(3)	 Reclassify interest expenses and other income of $112 million to financing charges




  
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